5 Easy Steps To Paying Off Your Holiday Debt

The holidays are over - but the debt isn't - especially if you used your credit cards to finance your holiday purchases.

As the credit cards statements start arriving in the mail over the next few days, here are some tips on how to tackle your holiday debt.

1. Figure Out Exactly How Much Debt You Have: You need to figure out where you stand. Tally up all of the balances on your credit card statements and know the interest rate on each card. Especially during the holiday season where we swipe our credit cards on gifts and purchases on a daily basis, it's tough to remember how much you spent on each credit card you have.

2. Negotiate The Interest Rate: What makes debt so expensive is the interest rates. The next step is to contact your credit card companies and ask them to lower the interest rate on the card - its as simple as that and ask to speak to a supervisor if necessary.

3. Balance Transfer Cards: Your other option is to transfer the debt on your current credit card to a new credit card that has a lower interest rate. These cards are generally called balance transfer cards and they have a low interest rate of say 0 to 5% for a short period of time, usually 6 months and these cards will save you money in interest and buy you some time to be able to gather the money to pay off that debt.

4. Pay MORE Than the Minimum Payment: On your credit card statement, you'll be asked to pay a minimum payment. The key is to pay more than the minimum payment. For example, if you have $1,000 in credit card debt with an interest rate of around 20%, it'll take you about 10 years to pay off the debt if you only pay the minimum payment. But if you double that minimum payment each month, and in this case that only means paying an extra $25 per month, it'll take you about 2 years to pay off the debt.

Even if you can only pay an extra $10 or $20 each month, do so!

Advertisement

5. Pay Off The Card With The Highest Interest Rate First! Focus on the card with the highest interest rate - chances are this is the card that's costing you the most money so you want to pay off its balance as soon as possible. Once this card is paid off, whatever amount of money you were paying on that first card, direct that amount to the card with the second highest interest rate. Keep doing this until all of your cards are paid off.